UPDATE 1-Greek banks Alpha, NBG report weak second-quarter earnings

ATHENS, Aug 31 (Reuters) - Alpha Bank and National Bank on Thursday reported weak second-quarter results, with Alpha making a loss on the sale of a Serbian subsidiary and NBG hurt by a trading loss.

Alpha, Greece’s fourth-largest bank by assets, reported a fall in net profit to 1.4 million euros in April-to-June from 48.1 million in the first quarter after taking a one-off 69.4 million loss on the Serbian subsidiary sale in April.

National Bank, the country’s second largest, reported a 52 million euro loss on continued operations, hurt by 73 million euro trading loss.

Greek banks are still struggling with problem loan portfolios after a protracted recession pushed unemployment to record highs, making it hard for borrowers to service debts.

They entered the 2008 global financial crisis with bad loans, or non-performing exposures (NPEs), of 14.5 billion euros, or about 5.5 percent of their loan books. But bad debts climbed to 106.9 billion euros, or 51 percent, last year.

The banks have agreed with regulators to cut the level to 66.7 billion euros by 2019, bringing the ratio down to 34 percent.

“In the second half we will continue to focus on diversifying our funding sources away from central banks along with delivering on our NPE business plan,” Alpha’s CEO Dimitris Mantzounis said in a statement.

Alpha, 11 percent owned by the country’s bank rescue fund HFSF, reduced its non-performing loans (NPL) ratio to 37.6 percent of its book from 38.1 percent at the end of March.

At NBG, Chief Executive Leonidas Fragiadakis said the group, which has been divesting foreign and non-core subsidiaries as part of a restructuring plan agreed with regulators, was exceeding bad-debt reduction targets.

The group, 40 percent owned by the country’s bank rescue fund HFSF, shrank its stock of non-performing exposures (NPEs) by 300 million euros quarter-on-quarter, with its NPE ratio settling at 45 percent. (Reporting by George Georgiopoulos. Editing by Jane Merriman)